This is why Solana is Trading Down – Elliott Wave Analysis

Solana (SOL) had a rough start this year, being down over 23% YTD. Based on the Elliott Wave analysis, SOL is trading down because we had an incomplete EW sequence from the all-time high of $259.80.

The price action is also showing a confluence of different technical factors that point to a potential reversal:

1. The 200-day simple moving average, which comes at $139

2. The critical support level at $130

Elliott Wave Analysis

When the price action is too "clogged", and the swing waves are not that visible to the naked eye, one can use the stochastic indicator to count the waves. Simply count the up and down oscillations in the stochastic indicator to find the appropriate wave count.

The decline from the all-time high of $259.80 is unfolding as a five-wave structure. However, since the waves are overlapping, the sell-off is corrective in nature. There is also no divergence in wave 3 and wave 5, so the entire price structure is not impulsive but corrective.

Down from November 7, 2021 high, wave 1 ended at $186.53, and rally in wave 2 ended at $243. SOL's price resumed lower in wave 3 towards $148 low, and rally in wave 4 ended at $204.78.

Short-term wave 5 is currently developing, which can find support at the $130 level, followed by the significant psychological level of $100.